SoftBank Group Corp. is planning to raise over $20 billion through the IPO of its Japanese mobile division. The company plans to list the unit on the Tokyo Stock Exchange on December 19 under the name SoftBank Corp. after setting the price on December 10.
The IPO is estimated to raise up to $23 billion and the majority of the shares will be offered domestically. The parent company will retain a stake of over 66% in the new entity. This move is part of SoftBank’s strategy of reducing its holdings in order to concentrate on a more lucrative portfolio of technology assets.
SoftBank is also planning to sell its stake in Sprint Corp. (S) to T-Mobile US Inc. (TMUS). This sale, along with the mobile unit IPO, will help SoftBank reduce its huge debt load and in turn improve its credit rating. SoftBank has plans to invest in major global start-ups through its SoftBank Vision Fund and the company is seeking new sources of finance for the same.
The mobile industry in Japan has been profitable but it continues to face issues such as tough pricing, lack of capital and low demand which hinder growth. The situation is likely to get tougher for mobile companies as prices get lower and the struggle to gain market share increases with the entry of new players.